Anaheim Snack Food Concern Slashes Wages and Eliminates Health Benefits
In what it says is a bid to save money by forcing many of its workers to quit or accept dramatically lower pay, Alex Snack Foods, an Anaheim manufacturer of tortilla chips, has slashed the salaries of most of its employees, some by 41%, and eliminated all health benefits.
The company said that on March 31 it cut the wages of the 45 lowest-paid of its 80 workers by up to $2.94 an hour. Steve Charton, a director and officer of Alex Snack Foods, said the company expects that most of its lower-paid workers, including some who have been employed at the plant for 30 years, will quit rather than continue to work for the lower wages and benefits.
The cuts, however, have enraged the workers and their union, which has filed a series of complaints with the National Labor Relations Board.
Art Johnson, chief operating officer for Alex Snack Foods and the company’s representative in the labor negotiations, said that under a “final offer” proposed three weeks ago and subsequently put into effect by the company, the production workers who put packages of corn tortilla chips into cartons were to have their wages reduced from a range of $5.66-$7.19 an hour to an across-the-board rate of $4.25 an hour--a wage cut ranging from 25% to 41%.
A few skilled workers who run plant
machinery, Johnson said, were given raises, but in general, he said, their pay, which previously ranged from $7.25 to $7.81 an hour, was cut to between $6.30 and $7.75 an hour.
The company also eliminated its health benefits, which included medical, dental and vision plans. Charton said the company plans to obtain a new policy with roughly similar benefits for its higher-skilled workers but does not intend to offer any health coverage to the lower-paid production workers.
He said that the cutbacks were ordered to make the company more competitive and that he expects many of his workers “will take new jobs and be trained differently. I think this is a trend that will be happening across the face of the food industry.”
On Saturday, 65 of the company’s 67 union workers met and voted unanimously to reject the wage cuts and other provisions of the new contract offer, a union representative said.
Charton said the company--which also operates a non-union facility in Anaheim--has identified “certain jobs we could fill with unskilled labor, part-time help and senior citizens,” all workers who would accept lower pay and could be more easily laid off to respond to changes in the marketplace.
These are the same kinds of workers, he said, that fast-food establishments like McDonald’s have “done so wonderfully with.” He estimated that the wage scale restructuring will save the company about $20,000 a month that it can partly use for an advertising campaign to promote its new Pinata brand tortilla chips.
Draws Fire From Union
The cutbacks, however, have drawn fire from the United Food and Commercial Workers Union Local 551, which represents all the workers at the plant and has filed a variety of charges against Alex Snack Foods, including an allegation that the company has “refused to bargain in good faith” during contract negotiations.
Company and union representatives have been in negotiations over a new wage and benefit package since December, and a federal mediator was brought in when talks broke down in March, a month after the old contract expired.
Greg Conger, a union representative, contends that the company broke its promise to extend the terms of the old contract by initiating the cuts before a settlement could be reached and a new contract could be adopted by the workers.
The company, however, denies that it has done anything illegal and says it has filed its own objections against the union with the NLRB.
Charton said the decision to cut wages at Alex Snack Foods has been “a most trying thing” for the family of Alex Morales, the company’s owner, president and chairman. “It is the most emotional thing I have ever seen them go through,” he added.
But Charton said the company needed to adjust to changes in its market. Thirty years ago, he said, the company also produced salads and tamales and needed a more skilled work force than it does today, when its principal products are tortilla and potato chips packaged for area supermarkets.
He said that store-brand chips have been steadily losing market share to branded-label products in the past five years and that, in response, Alex Snack Foods recently introduced its own brand of tortilla chip and needs the savings from the pay cuts to wage an advertising campaign for them.
